Just when you think you’ve heard everything about paying your team in California, someone (in this case, me) comes along talking about On Call and Reporting Time pay.
Before the confusion spiral sets in, let me explain.
First of all – these rules are specific to the state of California, and more specifically to non exempt (meaning overtime eligible) employees in California. Now if you are in a different state – I’m not saying there aren’t other states with some form of Reporting Time or On Call pay rules, or both.
For instance Connecticut, DC, Massachusetts, New Jersey, New York, Oregon and New Hampshire are some of the states with some type of reporting time pay requirements. So it’s a good idea to check with your specific state’s rules, and maybe even have a chat with your labor council to see what applies to you and your business.
But back to the basics, what is On Call and Reporting Time pay anyway. Well, I’ll take them one at a time – let’s start with Reporting Time pay.
Let’s say your warehouse employees show up for work, but the shipment didn’t come in as scheduled – so you don’t have anything for them to do. So, to give your budget a bit of relief, you send everyone home.
Well, this situation has just triggered Reporting Time pay. Because, if the employee shows up as scheduled, but you sent them home – you still have to pay them. And you have to pay them either half of their usual scheduled hours for the day (up to 4 hours), or 2 hours pay – whichever is greater.
So for example – let’s say I’m scheduled to work 8 hours that day, but I’m sent home. Well, you owe me 4 hours pay – that’s half of my 8 hr schedule. But if I was scheduled to work 6 hours that day, then you owe me 3 hours pay – again, half my scheduled hours.
“…if the employee shows up as scheduled, but you send them home – you still have to pay them. And you have to pay their either half of their usual scheduled hours for the day (up to 4 hours), or 2 hours pay – whichever is greater.“
Now, if I was scheduled for 10 hours for the day, you would still only owe me 4 hours, because even though that’s less than half of my scheduled time, that’s the maximum reporting time limit for the day.
On the other side, if you only had me scheduled for 2 hours for the day, then you would have to pay me 2 hours reporting time pay – because that is the floor limit. So even though it’s more than half my scheduled hours, you can’t pay me less than 2 hours report time pay in a day.
Now, two other things to keep in mind regarding Reporting Time. First, it doesn’t hold if you can’t operate due to threats to your employees or your property; if there is a recommendation to close from civil authorities, or things like the failure of public utilities or acts of God. So if the power goes out during a storm, you wouldn’t be liable for Reporting Time pay. In fact, that example hits both utility failure and act of God.
The second thing is that all this time has to be in the calculation of overtime. So Reporting Time hours count.
Now, on to On Call or Stand By pay.
This rule kicks in when the employee is standing by to start working. Let’s go back to our warehouse team for a second. Let’s say that you think the shipment may be coming in later in the day, so you call everyone at home and say, when the shipment arrives you are going to call them to come into work and start unloading.
Well, the time they’re waiting, and keeping themselves available to come back to work – that’s On Call time. (By the way, sometimes it’s referred to as On Call, and sometimes Stand By – but it’s basically the same).
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The deciding factor here is whether and how much the employee is under the employer’s control. So, if they are free to use the time for their own purposes, without any restriction (such as you have to be back on site within 15 mins of being called back), then it’s considered unrestricted or free standby time, and wouldn’t count as paid time.
But, if they have to stay on site, or have to report to work within a limited amount of time – then it most likely would be considered paid time under the On Call rules..
Now, I have a very important call out here – the determination of when On Call pay rules kick in can be very complicated and situation specific. So, you should absolutely consult with council to understand if your specific situation triggers On Call pay.
Another thing to consider, depending on your business and circumstances, you may want to have formal Reporting Time and On Call policies spelled out in your handbook. Why, because while you can’t change the state mandated guidelines, you do have a bit of flexibility with On Call. For instance, you can establish an On Call pay rate that is different from the employee’s regular pay rate. As long as it isn’t below minimum wage, you might find that it can save you a bit of money.
So that the Reporting Time and On Call pay overview. I hope it cleared up a few things. Oh, and always remember completely separate from Reporting Time or On Call pay – in all circumstances, if a non exempt employee works, you have to pay them for all time they actually worked.